PDD Holdings, owner of Pinduoduo and Temu, recently reported a 58% yearly increase in revenue for the first quarter of 2023. The company attributed the better-than-expectation performance to online retail recovery in China.
Along with the announcement of quarterly earnings, PDD also unveiled its latest major program, “10 Billion Ecosystem Initiative,” marking the company’s third initiative worth RMB 10 billion ($1.4 billion) following the “10 Billion Subsidy” and “10 Billion Agriculture” initiatives. The primary objective of this plan is to allocate additional resources to high-quality sellers, aiming to enhance the overall service efficiency and quality of the platform’s merchants.
This move aligns with the comments made by Chen Lei, PDD’s co-CEO, during the earnings conference call. He emphasized the company has been steadily shifting its strategic focus from pursuing rapid growth to emphasizing the quality of growth.
“Under our long-term strategies, we are continuously strengthening our supply chain capabilities and expanding the supply of high-quality merchandise. We will further increase our support for quality sellers by launching our 10 Billion Ecosystem Initiative and further improve the quality of our service while continuing to optimize our platform ecosystem.” Chen said.
Started as a platform for selling agricultural products, PDD is known for its stable and efficient supply chain. The company continues to uphold its policy of zero commission on agricultural products. As a result, agricultural merchants spends about only one-third to one-half on Pinduoduo than on other platforms. In early April, the company appointed co-founder Zhao Jiazhen as co-CEO. Zhao, with extensive experience in supply chains, focuses more on supply chain management and domestic business operations, while Chen Lei leads global expansions.
The co-CEO lineup highlights the company’s commitment to advancing supply chain expansion and optimization. During the early days of the company, Zhao played a key role in overall operations and supply chain development in the agricultural business. In 2020, he successfully led the Duoduo Maicai team in pioneering the community group-buying business model in Jiangxi province.
According to various reports, under Zhao’s leadership, PDD’s specialized teams will progressively explore 100 high-quality industrial hubs across at least 10 provinces in China this year.
A mature and robust supply chain relies on diverse and high-quality sources of goods. Pinduoduo’s new major initiative seeks to uphold the company’s position as a crucial source of goods in the e-commerce industry. The company promises this program not only involves providing financial support of billions of dollars to high-quality merchants, brands, and small and medium-sized enterprises but also assisting these merchants in expanding into international markets.
Extra subsidy for 618
Ahead of this year’s mid-year 618 shopping festival, PDD launched its 10 billion yuan subsidy program on April 6th, specifically targeting home appliances and consumer electronics. In addition to the existing subsidy, they will invest another to provide extra 10 billion yuan in subsidies for a wide range of digital home appliances, including smartphones, tablets, refrigerators, air conditioners, and others.
Major domestic and international brands such as Apple, Huawei, Honor, Xiaomi, Midea, Haier, Sony, TCL, Nintendo, Dyson, and Vivo have already participated in the program.
PDD will also collaborate with brands like Midea, Haier, Xiaomi, Vivo, Asus, TCL, and Hisense to launch a series of factory-direct products. Combining subsidies with direct sales to provide better discounts and benefits to consumers.
By promoting the direct connection between popular factory products and consumers through subsidies and direct sales, this approach benefits both the supply and demand sides. This initiative aims to offer consumers competitive prices and boost the manufacturing sector’s recovery.